Do I need a separate business bank account from a personal account?

If you’re running a business, using a personal bank account might appear to be the easiest option. However, it can create financial headaches that you might not be aware of — from a jumble of personal and business expenses to messy tax reports.

In this blog, we’ll outline the reasons why you should open a separate business bank account and explore the benefits of setting one up. We’ll also introduce Wise Business that lets you use both personal and business accounts.

Table of contents
Difference between business bank account and personal account? Benefits of having a separate business bank account? How to set up an Australian business bank account? Manage your finances with a Wise Business account FAQs

How does a business bank account differ from a personal account?

Business bank accounts are built for managing business finances at scale. In contrast, personal accounts are made for individual use.

Here are some key differences between the two accounts:

Features	Business	Personal
Designed for business use	Yes	No
Monthly fee	Yes*	No
Integration with accounting software	Full	Limited
Tax reporting facilitation	Yes	No
Transaction limits	Higher	Lower
Supports multiple users	Yes	No

*Wise offers a business account without recurring monthly fees.

Can I use a personal bank account for business in Australia?

Using a personal bank account is against the law if you’re operating as a partnership, company, or trust. The Australian government states that opening a separate business bank account to file tax is mandatory for these business structures.

You can use a personal account if you operate as a sole trader, but authorities state that it’s still a “good idea” to set up a business account¹. Mixing personal and business transactions can make it very difficult to maintain accurate financial records for your business and remain tax compliant.

And if, for any reason, the Australian Taxation Office (ATO) requests an audit down the line, they will likely comb through all of your incomings and outgoings if you keep everything in one account. Other downsides include:

• Increases the risk of mixing up your expenses
• Can limit your access to business loans or funding options
• Makes financial reporting and tax filing complicated

Benefits of having a separate business bank account?

Managing a business is difficult enough without having to wrestle with an account that isn’t fit for purpose. Personal accounts are mainly for simple incomings and outgoings. Most businesses require advanced account features to complete higher volumes of transactions, manage cash flow, sort bookkeeping, and pay taxes.

The main benefits of a business bank account include:

• See clearer business finances - It’s tough to make smart decisions about finances when grocery purchases are mingled in with supplier expenses. You won’t know how or why your balance is going up or down at any moment. A business account provides a complete, transparent overview of business finances.
• Separate funds for tax reporting - When tax season arrives, you won’t have to spend hours sorting your transactions and identifying any expenses, such as travel and office costs or bank fees that might be tax-deductible.
• Integrate accounting software - Business bank accounts can be connected to QuickBooks and other accounting software. This ensures every transaction is automatically synced and categorised for easy bill paying and reconciliation.
• Access business tools - Business bank accounts include tools — invoicing, batch payments, expense tracking, international account details, interest, automated payment reminders, etc. — that make managing finances much easier and efficient.
• Secure funding - Many lenders and investors only consider offering loans and funding to those with a separate business bank account, as it makes it easier for them to assess financial health and stability.
• Go global - Some business bank accounts like Wise Business can help manage global transactions across multiple currencies. This can help sustain long-term growth and ease the effort required in managing finances during global expansion phases.

How to set up an Australian business bank account?

Opening a business bank account will clearly delineate your personal expenses from everything that’s associated with your business.

Here’s a quick step-by-step guide for setting up a business bank account in Australia.

1. Research and find the right business bank account

A new bank account should be a good fit for your business. There are lots of options tailored for specific business types. You can narrow down your choices by evaluating the following factors and deciding what your business needs:

• Banking account fees
• Transaction limits
• Overdraft facilities
• International transactions and fees
• Savings account interest rates
• Business account features

2. Gather the necessary documents

Every bank in Australia has different criteria and requirements, but the documents you’ll need to prepare for your application usually include¹:

• Australian Business Number (ABN)
• Business name and registration documents
• Personal identification and details, such as passport or driver's licence
• Proof of primary business address
• Industry type
• Tax File Number (TFN)

👆Learn more about how much it costs to get an ABN when registering a new business in Australia!

3. Apply for a business bank account

Once you’ve got your documents together, it’s time to start your application. Most banks now let you apply and submit your documents online, but you might need to visit a local branch to finalise and verify your details.

The whole process shouldn’t take long. Most banks advertise application times of 15 minutes or less. And there is often just a small charge to pay to open an account, but always double-check the monthly and transaction fees before signing up.

👆Additional info: Check our guide for a full rundown on different business bank account and alternatives out there.

Manage your finances with a Wise Business account

Wise takes the hassle out of business finances. There are no outlandish fees, transaction limits, or hoops you’ll need to jump through to access certain features. You can make and receive payments and manage your cash flow with ease.

If you’re targeting expansion overseas or already pay suppliers and freelancers in New Zealand and other countries, Wise can also lay the groundwork for managing all of your international finances. With our business account, you get local account details in 8+ currencies, including AUD, NZD, USD, and more.

What's more is that, Wise Business facilitates currency conversions at the mid-market rate, which means that you do not waste money on hidden fees or markups on the exchange rates.

Opening a Wise business account

1. Go to Wise Business and click ‘get started’ or ‘register’
2. Enter and confirm your email address
3. Select ‘Australia’ from the drop-down box for business location
4. Agree to our terms and conditions after reading through
5. Verify your phone number with a security code
6. Tell us more about your business, including its size and industry
7. Provide personal details to verify your identity
8. Set up and pay for a transfer

If you’ve already got a personal account with us, the process is even easier. All you need to do is head to the settings, select ‘open an account’ in the top right corner and then click ‘business account’ and go from there.

Everything should then be verified within a few working days — we’ll email you confirmation when it’s all sorted.

What's more, you'll benefit from the following with a Wise Business account:

• Free to register — Hold and convert between 40+ currencies. Send to 140+ countries
• Debit cards for you and your team, which you can use in 150+ countries
• Multi-user access for team members, with ways to control and manage permissions
• Pay up to 1,000 recipients at once with the Wise batch payments feature
• Integrate with your favourite cloud accounting solutions like Xero, Quickbooks, and more
• Get account details to receive in 8+ currencies for a one-time fee of 65 AUD

Sign up for the Wise Business account! 🚀

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FAQs

Can I add someone to my business bank account?

Yes, generally you can add new people to your business bank account, but the exact process and policies for doing so depend on the bank you have the account with.

Wise Business lets you add people and manage your team’s permissions using multi-user access (MUA). All you have to do is invite them to your account. Once they’ve completed the verification checks, they can use the account based on the controls you’ve set up. You can even order multiple Wise Business debit cards for them to use.

Can I take money out of my business account for personal use?

Yes, you can take money out of your business account for personal use, but you must declare it as income in your tax return. Any money or assets taken from your business need to be recorded and reported accurately.

You can refer to the ATO’s guidance on using business money for a full rundown on what you need to do.

Can I have one bank account for multiple businesses?

You can use one bank account for multiple businesses in Australia. However, like for personal accounts, it’s a good idea to have separate accounts for each business to make it easier to track finances and file your taxes.

When you buy a business, do you get the bank account?

No, you don’t usually inherit the existing bank account when buying an existing business. You are likely to have to make a new business bank account with your own details. The funds are then transferred from the previous owner to you.

Can I earn interest from a business bank account?

Yes, you can earn interest from a business bank account. The interest rate will depend on the bank and the account type.

Explore Wise Interest to earn potential returns on your AUD and USD balances*

Your money is invested in a fund of government-backed securities—without being locked away. So, you can still spend your balance as usual while it has the opportunity to grow.

** Wise Interest is a custody and nominee service offered through Wise Australia Investments Pty Ltd (ACN 659 961 083) (AFSL: 545411). Franklin Templeton is the issuer and manager of the Franklin Government Cash Fund. Capital at risk. Growth not guaranteed. Terms and conditions apply. Please refer to the Wise Australia Interest Legal page for Wise Australia Investment's Financial Services Guide and the fund's Product Disclosure Statement to see if this product is right for you.

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Sources:

1. Business Gov Au - Set up your business bank account